Sharing economy services – businesses that use a model similar to Uber – are popping up all over the place, and recently, the NSW government announced that it will be easing regulations to make life a little easier for them.
But this was almost inevitable, says Chris Noone, CEO at Collaborate Corporation Ltd, because the charge was being led by consumers. At this point, the government is just trying to catch up.
“The sharing economy business model provides enormous scope to solve the problem of under-utilised assets and deliver better value to customers, with the added opportunity to embrace technology to make it easy and safe,” he says.
This won’t be great for businesses that use a traditional business model, but as Noone points out, the pressure of competition isn’t new, and businesses have always been forced to adapt to survive.
“If companies do not listen to their customers, they will lose them,” he says.
One very important challenge is making sure that the sharing economy marketplaces develop trust between participants.
For a sharing economy business to work, however, a lot of things have to fall into place.
First, there needs to be owners and renters, any potential business needs to create an environment where both parties are rewarded for doing their part. To take Uber as an example, if the people volunteering their cars weren’t making money, or if the people hiring them didn’t save money, the service would have failed. Another difficult aspect of the business is model supply and demand.
Any new business that wants to use this model needs to find a big problem to solve – a big gap in the market – that can’t be addressed by traditional business models.
“One very important challenge is making sure that the sharing economy marketplaces develop trust between participants,” says Noone.
On the upside, if a sharing economy business finds a big enough problem to solve, it can scale up very quickly without a huge investment, and because these businesses don’t need to buy stock or assets, they can use their money for technology and marketing.
For existing businesses, Noone says they need to listen to their customers. The accommodation industry is a good example – on the whole, it doesn’t appear to know how to retain its customers, says Noone.
“Families have been large adopters of private accommodation services because they offer much better value for money than hotels, which will force you to book two or three rooms at high cost to accommodate a family, which is why Airbnb has been so successful.”
The relaxed regulations around sharing economy businesses mean we will continue to see disruptive sharing economy businesses pop up, says Noone.
“We’ve seen interest from companies and government has skyrocketed in the past three months, and we see this trend continuing as they begin to understand the opportunity to earn income from idle assets and also obtain assets more cheaply.”
Jan is a Sydney-based writer and editor whose work has been published in a stable of titles including the National Post, The Daily Planet and Edmonton Examiner. He is currently Editor at ShortPress.